We’re buying 25 shares of Johnson & Johnson (JNJ) at roughly $153.55 each. Following Tuesday’s trade, Jim Cramer’s Charitable Trust will own 625 shares of J & J, increasing its weighting in the portfolio to about 3.7% from 3.55%. After keeping our powder dry since the end of February, we’re making one small buy into weakness Tuesday. We chose Johnson & Johnson . Stocks turned lower as bond yields moved higher after Federal Reserve Chairman Jerome Powell’s prepared remarks for Tuesday morning’s Senate Banking Committee hearing were released. One of his key points was an acknowledgment of the recent stronger-than-expected economic data, and how it suggests interest rates will need to be raised to a higher level than expected. Powell went on to mention that policy decisions will be made on a meeting-by-meeting basis. We like this because the Fed must remain data dependent. But he noted that the Fed is prepared to increase the pace of rate hikes if the data were to deem it necessary. The market’s interpretation of this point is that the Fed will have no problem raising rates by 50 basis points if necessary at its March meeting after previously downshifting to 25 basis points in February. In total, the market digested Powell’s comments and as a result, increased the probability of a 50 basis point rate hike at the March 21-22 meeting. The probability of a 50 basis point hike increased to 54% from 31% Monday, according to the CME FedWatch Tool. Powell’s comments are in line with what we already know. A lot of the data has been too strong lately, especially the January nonfarm payroll report, which saw jobs increase by 517,000 compared to estimates of 187,000. Average hourly earnings in January increased 0.3% and 4.4% from a year ago. We will know Friday how much of this labor market strength persisted into February when we get fresh jobs data. But as of now, it looks like the month was not expected to be nearly as hot as January. Current estimates indicate a 224,000 increase in jobs, with average hourly earnings rising 0.3% month over month and 4.7% year over year. Perhaps still too hot, but not as hot. Powell’s comments have sent the market lower Tuesday, bringing down prices of quality companies with growth potential, even in an uncertain macro environment. When quality goes on sale, we want to buy. JNJ YTD mountain Johnson & Johnson (JNJ) YTD performance Johnson & Johnson has had its struggles this year due to an overhang related to talc litigation . It also hasn’t helped that defensive stocks that outperformed in 2022’s bear market have become a source of funds to investors this year buying beaten-down technology stocks and companies with more cyclicality. We can’t predict how long J & J will be out of favor, but we’re willing to be patient because it has earnings growth, a pristine balance sheet and an almost 3% annual dividend yield. We also like this health-care giant for its breakup catalyst. Later this year, J & J will separate its consumer health business, which will be called Kenvue, from its pharma and medtech business, which will keep the Johnson & Johnson name. We’re fans of the separation because it will allow the new management teams to better align capital allocation decisions with the goals of each company. For example, J & J should be able to allocate more resources to research and development (R & D), while Kenvue can look for more bolt-on acquisitions to boost growth. Kenvue will be the new home for household names like Band-Aid and Tylenol, among many others. (Jim Cramer’s Charitable Trust is long JNJ. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
When quality stocks go on sale in a rough market, we like to go shopping. Here’s our latest buy
A general view of the facade of the New York Stock Exchange on January 13, 2015 in New York City.
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